Kangaroo Is a Threat to UK Online Ad Market, Watchdog Told

08 December 2008

LONDON: Britain's Competition Commission is wrong to assume  that Project Kangaroo (the proposed video-on-demand internet service from BBC Worldwide, ITV and Channel 4) will present no threat to the UK online advertising market.

In a preliminary decision handed down last week, the commission ruled that although the joint venture would substantially restrict competition in the supply of V-O-D services in the UK, it would have negligible effect on the online advertising market.

Screen Digest, a firm specialising in global media market analytics, strongly differs. It avers that  Kangaroo's operations, allied to those of its media owners, is "likely to mop up the vast majority of premium advertisers because it will dominate the monetisable online TV in the UK".

"This has the potential to stunt the online TV market at a key time in its development as [foreign-controlled] third parties [eg, Five, BSkyB and MTV] are likely to find it hard, if not impossible to find advertisers willing and able to buy high CPM in-stream advertising in sufficient volumes to cover the cost incurred by many services." 

Conversely, the analytics firm also disputes the regulator's finding that Kangaroo would have an adverse effect on competing UK V-O-D services.

It argues that Kangaroo would wield little power in the supply of online pay-TV because it does not own or control distribution of a playback device on which its content can be viewed.

To support this view, Screen Digest points to powerful existing competition in the playback market, citing Apple'siPlayer and Microsoft'sXbox 360. But for reasons unknown, Screen Digest fails to mention BSkyB's online SkyPlayer and its Sky+ PVR

"Were the Kangaroo partners to withhold content from any of these platforms it would be the UK online TV market that would suffer and not these companies' hardware sales," it pontificates.

Data sourced from BrandRepublic (UK); additional content by WARC staff